SYDNEY — Australian shares climbed nearly 1% by midday Wednesday, brushing aside a jump in inflation as defense technology, gold and property stocks rallied a day after the Reserve Bank of Australia lifted interest rates to their highest level in 15 years.

The benchmark S&P/ASX 200 index was up 86 points, or 0.99%, at 8,795.3 as of 12:42 p.m. AEST, putting it on course for a second straight gain. The index had closed Tuesday up 29.6 points, or 0.34%, at 8,709.3. The morning advance also pulled the market back into positive territory for 2026, with the ASX 200 returning to gains for the year as rate-sensitive stocks bounced.

The rally came despite a subdued lead from overseas. SPI futures had pointed to a 5-point decline at the open after the Dow Jones fell 0.25%, the S&P 500 slipped 0.15% and the Nasdaq eased 0.1%.

Inflation climbs to 4%

Investors digested fresh consumer price data released at 11:30 a.m. Australia's annual inflation rate rose to 4.0% in August from 3.5% in July, according to the Australian Bureau of Statistics. Prices rose 0.4% for the month, slowing from July's 1.0% increase and matching market expectations. The trimmed mean measure, a gauge of underlying inflation closely watched by the central bank, rose 0.2% in the month and 3.6% from a year earlier.

ABS head of price statistics Rachael McCririck said housing was the biggest driver of annual inflation in August, with housing costs up 5.7%. Fuel costs also added pressure, as the Middle East conflict continues to keep energy prices elevated.

The reading remains well above the RBA's 2% to 3% target band. The Australian dollar drew some selling after the data was released.

Because the result largely matched forecasts, traders appeared to view it as unlikely to force the central bank's hand in the near........

© International Business Times